November’s sales pace was revised down to 5.78 million units, still the highest level since February 2007. Economists polled by Reuters had forecast home sales falling 2.2 percent to a 5.70 million-unit rate in December from a previously reported 5.81 million-unit pace in November.

Existing home sales, which account for about 90 percent of U.S. home sales, rose 1.1 percent on a year-on-year basis in December. They increased 1.1 percent to 5.51 million units in 2017, the highest since 2006.

The NAR attributed the sales decline in December, which followed three straight months of gains, to a perennial shortage of houses at the lower end of the market.

The number of previously owned homes on the market tumbled 11.4 percent to 1.48 million units in December, the lowest since January 1999 when the Realtors group started tracking the series. Housing inventory was down 10.3 percent from a year ago. It has declined for 31 straight months on a year-on-year basis.

At December’s sales pace, it would take a record low 3.2 months to exhaust the current inventory, down from 3.5 months in November. A six-month supply is viewed as a healthy balance between supply and demand.

With supply still tight, the median house price increased 5.8 percent from a year ago to $246,800 in December. That was the 70th straight month of year-on-year price gains. House prices increased 5.8 percent in 2017, rising for the sixth straight year.

Despite December’s drop in sales, housing is expected to have contributed to economic growth in the fourth quarter after being a drag for two straight quarters.

The PHLX housing index was trading higher, in line with a broadly firmer U.S. stock market.

The dollar fell to a three-year low against a basket of major currencies after Treasury Secretary Steven Mnuchin said the weaker greenback was positive for American trade. Prices for U.S. Treasuries were trading lower.

First-time buyers accounted for 32 percent of transactions last month, up from 29 percent in November, but unchanged from a year ago. Economists and realtors say a 40 percent share of first-time buyers is needed for a robust housing market.

House price increases have outpaced wage growth, which has struggled to break above 2.9 percent since the 2007/09 recession ended. In December, houses typically stayed on the market for 40 days, unchanged from November and down from 52 days a year ago.

Forty-four percent of homes sold in December were on the market for less than a month.

Supply could improve this year as data last week showed permits approved for the construction of single-family home increased in December to their highest level since August 2007, while the number of such dwellings under construction was the most in 9-1/2 years.

In December, existing home sales fell 7.5 percent in the Northeast and dropped 6.3 percent in the Midwest. Sales slipped 1.7 percent in the South, which accounts for almost half of the existing homes sales market. They fell 1.6 percent in the West, which has seen a strong increase in house prices.